Debt Collector Suing you?

Nobody ever wants to be wrapped up in any type of a lawsuit, however if a past debt of yours has been sent to collections, then the possibility of being sued is there. That’s right, typically when an account goes to collections, the debt collector will take one of two routes based on the research he/she does on you. These are to either:

Regularly contact you as a means of getting you to settle the debt.

Take you to court.

Usually, the latter decision is made when the collector thinks they can get more money out of you that way. However, usually when a debt collector takes a consumer to court, they’ve very confident that they’ll be on the favorable side of the outcome. That’s because suing a consumer isn’t cheap – there are attorney fees and filing fees involved, which certainly can add up. In other words, taking a consumer to court isn’t a slam-dunk move that’s made – it has to make sense. first

So let’s say a debt collector thinks suing you makes sense in your case. Would you know what to do? Here’s a closer look:

A Debt Collector is Suing Me: What Now?

You just got the notice in the mail that you’re being sued for a delinquent debt. Here’s what you need to do:

Don’t ignore it: Ignoring the notice will only make things worse. Contrary to what many people believe, ignoring the lawsuit won’t make it stop or go away. So when the notice comes, be sure to sign it to make it known that you received it. If you ignore the lawsuit, the likely outcome is that the court will order a judgment for the debt that you owe – plus you may be required to pay any attorney fees the collector accrued. This is often completed through garnishing your wages, placing liens on any property you own or freezing your bank account until the debt is settled. We’ll say it again because we can’t downplay its importance – don’t ignore the lawsuit!

Lawyer up: After acknowledging the lawsuit, you need to seek legal representation. We strongly advise speaking with an attorney that specializes in the Fair Debt Practices Act so that you can get a complete and thorough understanding when it comes to your rights. It’s also worth noting that in most debt collection lawsuits, an agreement is reached outside of the courtroom that is satisfactory to both parties. But without a qualified lawyer, you’re likely headed for defeat.

Of course, we’d be remiss to mention that the best way to avoid this type of lawsuit is to stay on top of your finances, pay bills on time and don’t let your borrowing get out of hand. For those that are sued though, know that you can often reach an amicable agreement with the collector if you have the right representation.

Feds Crack Down on “Phantom Debt Collection” Scheme

Hundreds of thousands of Americans have received phone calls from people purporting to be either debt collectors or police pursuing delinquent debt. The callers contact people at work and at home. Many calls come in the middle of the night. The victims are threatened with harassment or imprisonment. The scammers have collected at least $5 million from people who did not owe them money.

These scams are persuasive because the callers usually have a great deal of personal information about the victims. They often know when a loan was made, the loan amount and other details. Because of the amount of information they have and in an effort to avoid trouble, many people pay up.

Phantom debt is debt that is old, defaulted, paid or otherwise not owed by the debtor. While phantom debt can sometimes appear on credit reports as an error, the current case involves individuals deliberately trying to collect money that is no longer owed.

The Federal Trade Commission has frozen the bank accounts of Kirit Patel, a front man who set up the California company behind the scam. The FTC and the state of Illinois are suing six companies and three people who have used a number of business names in the scam, including Stark Recovery, Stark Law and Capital Harris Miller and Associates. While the calls originate in India, the scam is supported by the participation of people in the U.S. American corporations are set up to collect the information that is used when calling the alleged debtors.

This is not the first case of widespread phantom debt fraud. In November 2015, the FTC reported on a company called Delaware Solutions or Clear Credit Solutions that allegedly purchased payday loan debts. The debts were not valid, but, the company proceeded to call and harass people to intimidate them into paying.

What should you do if you are contacted about phantom debt?

There are a number of laws that protect people from unfair pursuit of debts. Knowing your legal rights can help protect you against scammers. If someone contacts you about a debt that you do not think you owe:

Ask for a validation notice. This is a document that confirms, in writing, how much you owe and what the debt is for. By law, it must be sent to you within five days of contacting you.
Remember that it is illegal for a debt collector to threaten or harass you.
Know that a debt collector cannot put you in jail.
Know that you can tell a debt collector must, if you ask, only contact you in writing.
If a debt collector does not validate a debt or threatens or harasses you, report them to the FTC and your state’s Attorney General’s office.

Knowledge of your rights can help protect you and preserve your good credit. Do you need help improving your credit score and erasing phantom debt? Contact Key Credit Repair today.